Oil Search Limited ARBN

Transcription

1 Oil Search Limited ARBN

2 Emergency Evacuation 2

3 Presentation by Managing Director Peter Botten Oil Search Limited ARBN

4 Safety: a core priority for Oil Search Total Recordable Incident Rate OSH IOGP 4 Per million hours worked Per million hours worked Lost Time Injury Frequency

5 Leading track record of long-term shareholder value creation 15 year Total Shareholder Returns to 17 May % 743 % 700% 600% 500% % TSR 400% 300% 307 % 273 % 200% 100% 148 % 116 % 106 % 87 % 0% Australian Peer U.S. Peer UK Peer U.S. Peer U.S. Peer U.S. Peer 12 % Australian Peer Source: Capital IQ 5

6 Significant milestones achieved in 2016» PNG LNG production of 7.9 MTPA (8.3 MTPA in 1Q17, 20% above nameplate)» Major increase in OSH s PNG LNG Project reserves (1P up 50%, 2P up 12%) following independent certification:» Supports increased production rates and leaves discovered undeveloped resources at P nyang and Elk-Antelope to support expansion ExxonMobil commenced marketing up to 1.3 MTPA of additional PNG LNG volumes» Increase in Elk-Antelope resource and completion of ExxonMobil acquisition of InterOil (Feb 2017): 2C gas up 21%, to ~6.5 tcf ExxonMobil s entry into PRL 15, very strong JV (OSH, Total, ExxonMobil) JV discussions underway on optimal development plan» Discovery of gas at Muruk. Potentially significant new gas field, reduces uncertainty of several leads and prospects on-trend 6

7 LNG expansion focus for 2017 and beyond Sources of gas for expansion Muruk P nyang Hides Juha Kutubu Gobe Elk-Antelope» ~10 tcf of discovered undeveloped gas in Elk- Antelope and P nyang: ~ tcf 1C 2C Elk-Antelope P nyang Total » Sufficient to support two additional PNG LNGsized LNG trains» Subject to further appraisal, Muruk discovery could add to resource and increase future options 7

8 Continued Asian LNG demand growth in medium long term Americas Europe Asia » Move to zero emissions environment driving greater use of gas as alternate fuel source MENA » Asia remains fastest growing region key source of demand Source: FGE Online Data System Units are MTPA of LNG 8

9 PNG well placed to capture market opportunities Long-term LNG market fundamentals are strong: Number of LNG importing countries / LNG buyers growing: Traditional exporters in market as buyers for domestic requirements New buyers: Thailand, Singapore, Bangladesh, Vietnam, Pakistan, Philippines, Egypt, Jordan Additional supply required to replace expiring contracts with Asian buyers (>45 MTPA from Japan, >20 MTPA from Korea between ) LNG usage expanding (eg in merchant shipping) LNG from PNG well positioned to capture market opportunities: Continued exceptional performance from PNG LNG Project Additional PNG LNG volumes being marketed following recertification 10+ tcf undeveloped resources with overlapping ownership interests Co-operation between PNG LNG, P nyang and Elk-Antelope will result in competitive brownfield integrated development New technology incl FSRUs supporting demand growth, enabling faster delivery to markets 9

10 >10 tcf undeveloped gas resources at P nyang and Elk-Antelope» Following 2016 appraisal programme, gross 2C contingent resource at Elk-Antelope increased to ~6.5 tcf (up from 5.3 tcf previously booked), with 1C of >5 tcf» Final appraisal well, Antelope 7/7ST1 completed in Feb 17. No change to resource numbers» Five-year extension of PRL 15 licence granted in Dec 16: P nyang Elk- Antelope Terms of licence extension stipulate completion of pre-feed and FEED by end 2018» P nyang South 2 well scheduled to be drilled in 2H17, contracting for well pad construction underway: Aim to move 2C contingent resource into 1C category (currently ~1.1 tcf), with potential to add to existing 2C of 3.5 tcf Resource certification to follow well completion Sufficient resources to underpin two PNG LNG-sized trains Gross Resource* (tcf) * Upstream dry gas 1C Elk-Antelope 2C P'nyang 10

11 Major cost savings from cooperative LNG expansion» Discussions on LNG expansion underway between ExxonMobil, Total and Oil Search 18» Oil Search, partners and Government have confirmed intent to pursue coordinated development» Targeting alignment on commercial model in 2H17, when Oil Search and partners intend to present development concept to newly elected government LNG Export (MTPA) Elk-Antelope + P nyang [+ Muruk]» Significant cost benefits of LNG expansion integration: 6 4 PNG LNG Project» Potential downstream capex savings of US$2-3bn and opex savings of US$125m pa» Maintains two major operators in PNG

12 Opportunities for sharing at PNG LNG plant site Sharing of utilities, power generation, metering, controls Reduction of overall tank storage requirements Construction of spur instead of new jetty & sharing of shipping channel Infrastructure (laydown, roads, camps, buildings) Sharing of flare 12

13 Gas commercialisation activities in work streams to progress timely co-operative development Elk-Antelope Completion of Antelope 7ST1 (done) ExxonMobil entry into PRL 15 (done) P nyang P nyang South 2 pad construction commenced April 2017 Target P nyang South 2 in 2H17 (after wet season) and recertification Integration technical study and commercial discussions between JVs and PNG LNG to deliver binding agreements Concept Select and commencement of upstream and downstream pre-feed before YE 2017 Gas Agreement discussions to commence before YE 2017 FEED

14 Significant remaining exploration upside in PNG» PNG-wide prospectivity review completed in 2016: P nyang Muruk NW Highlands Estimate that >7bn boe is yet to be found, with >90% gas Elk /Antelope» Materially expanding PNG acreage: Three key areas NW Highlands, Gulf/Forelands, offshore Gulf Gulf / Forelands Focus on gas expansion and delineating remaining oil Strong portfolio, including several game changers Offshore Papuan Gulf : Shallow and deep water 14

15 Material gas potential at Muruk and along Hides-P nyang trend» Gas discovered at OSH-operated Muruk well in Dec 16» Muruk 1ST3 well successfully drilled through Toro reservoir in May 17: Blucher NaDia Karoma Entire Toro gas saturated, reservoir similar to Hides No gas:water contact penetrated Production tests will assess deliverability and flow rates Evaluation of data from Muruk drilling programme will assist in designing potential appraisal programme in 2018» Favourably located (~21km NW of Hides)» De-risks exploration leads and prospects along trend between Hides and P nyang: Combined unrisked potential mean resources of 4-6 tcf Targets to be confirmed by seismic in 2017 for drilling in Muruk and other prospects offer potential upside to 2C resource in Elk-Antelope and P nyang 2C 1C Muruk 1 15

16 Small scale LNG (sslng)» Opportunity exists to commercialise smaller undeveloped gas resources from Gulf, Western and Highlands Provinces through smaller scale LNG development ( MTPA)» Likely to require combination of in-country and regional end users: Potential for supply to capture fuel requirements for mines and east coast of PNG Regional LNG supply prospects for power generation» Oil Search to appraise Barikewa and Kimu fields in 2017 and Uramu in 2018, to confirm resource base for potential sslng: Partnering strategy to facilitate development 16

17 2017 production forecast at mmboe OSH Net Production (mmboe) 1, PNG LNG (T1 + T2) Hides GTE SE Mananda Gobe Moran Kutubu Operated Fields * 6.47* 7.08* 7.03* * * F 1. LNG sales products at outlet of plant, post fuel, flare and shrinkage 2. Gas:oil conversion rate from 2014 onwards: 5,100 scf = 1 barrel of oil equivalent (prior 6,000 scf/boe) * Oil Search operated production, including SE Gobe gas sales to PNG LNG Project» 2017 production forecast similar to 2016: Further improvements from PNG LNG will offset decline from mature oil fields Forecasts include PNG LNG routine compressor maintenance planned for May 17 and Sep 17 and two week shutdown of oil fields for maintenance in May» Beyond 2017: Planning for Angore tie-in and HGCP modifications in 2018: Production optimisation benefits in 2019 (~8.5 MTPA) Two new LNG expansion trains would result in >50% increase in OSH production 17

18 Robust financial metrics» 2016 operating cash flow of >US$550m or US$18.15/boe» Solid balance sheet. Cash of >US$ 1 billion, available credit facilities of US$750 million, liquidity of US$1.77bn at end 1Q17» Total debt of US$3.94 billion, all relating to PNG LNG project finance facility: 2016 Cash flows Non Escrow Escrow Opening Cash Non Escrow Escrow Operating Investing Financing Closing Cash» Mortgage-style repayment profile to 2026» Refinancing of US$500 million corporate facility nearly complete:» Strong interest from bank market, facility to be expanded to US$600 million.» Improved terms Cash and Corporate Facilities available 1, Q17 Cash (US$M) Corporate Facilities Available (US$M) 18

19 Social Responsibility» Operating and political stability essential for long-term sustainability» Comprehensive strategy to manage current and emerging ESG risks» OSH recognised globally for its in-country sustainable development outcomes and managing local/community issues: Provision of health services, women s empowerment and education, directly and through Oil Search Foundation Partnerships on key infrastructure development on behalf of PNG Government, funded by Infrastructure Tax Credit Schemes Capacity development of State enterprises and landowner companies» Provision of reliable, competitively priced power that can improve PNG s development and contribute to PNG emissions reduction targets, by reducing reliance on heavy fuel oil/diesel: Markham Valley Biomass Project in FEED Tari power grid Small-scale LNG under consideration 19

20 Summary unprecedented platform for growth» 2016 Strategy Refresh highlighted potential to deliver top quartile returns for next 5 7 years» Delivery of LNG expansion, underpinned by development of Elk-Antelope and P nyang gas fields, key to OSH s ongoing high-returning growth» Recent milestones establish strong platform to deliver: Upgrade in PNG LNG Project reserves supports expanded capacity, additional marketing to 7.9 MTPA underway. World class project and infrastructure Strong resource base with 10 tcf+ in P nyang and Elk-Antelope available for expansion Entry of ExxonMobil into PRL 15 has triggered cooperation discussions, strong support from all stakeholders» Building excellent exploration portfolio, complementary to gas commercialisation» sslng provides potential to commercialise smaller gas fields» Comprehensive in-country community-based programmes, underwriting stable operations» Further organisational optimisation with succession planning» Underpinned by solid financials 20

21 Disclaimer While every effort is made to provide accurate and complete information, Oil Search Limited does not warrant that the information in this presentation is free from errors or omissions or is suitable for its intended use. Subject to any terms implied by law which cannot be excluded, Oil Search Limited accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice. This presentation also contains forward-looking statements which are subject to particular risks associated with the oil and gas industry. Oil Search Limited believes there are reasonable grounds for the expectations on which the statements are based. However actual outcomes could differ materially due to a range of factors including oil and gas prices, demand for oil, currency fluctuations, drilling results, field performance, the timing of well work-overs and field development, reserves depletion, progress on gas commercialisation and fiscal and other government issues and approvals. 21

22 Oil Search Limited ARBN